Stifel analyst, Aaron Rakers, noted the Nikkei is reporting that Toshiba, along with its US partner Western Digital (NASDAQ: WDC), will be spending ¥1.5 trillion (~$14.6 billion) over the next three years on expanding their NAND Flash memory production at the Yokkaichi, Japan plant in the Mie Prefecture. The report notes that this funding commitment is approximately 30% more than the prior comparable periods (note: unclear as to what reference point this is exactly using). According to the report, the joint venture between Toshiba and Western Digital (Flash Ventures) is planning to have 3D NAND Flash account for more than 50% of the company’s fiscal 2017 (period ending March 2018) production and over 80% of production in fiscal 2018 (March 2019). While it is unclear as to how much of this capex spend relates to conversion of existing capacity versus greenfield deployments, the analyst's rough estimates would imply this supports ~200-250k wspm of 3D NAND capacity (vs. the current ~505k wspm of capacity). As a reference, Samsung’s new Xi’an, China fab has been estimated to cost over $7 billion (some industry contacts reporting up to $9 billion) for ~135k wspm of 3D NAND capacity.

No change to Buy rating or price target of $75.00

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Shares of Western Digital Corp. closed at $46.47 yesterday.